Fsa Exam 1 Questions And Answers 2023

Interest expense appears in which financial statement? {Ans: Income statement}Porter five forces of competitive intensity {Ans: Industry competition, threat of entry, supplier power, buyer power, threat of substitution}Altman Z-score interpretation {Ans: If the Z-score>3, the company is less likely to go bankrupt}NOAT {Ans: Net operating asset turnover. For each $ of operating assets the company realizes NOAT in sales. Higher NOAT=higher liabilities}Credit raters {Ans: 3 largest: S&P, Moody, Fitch}Increasing NOAT will {Ans: Increase RNOA and ROE}Highly leveraged firms have what kind of RNOA? {Ans: Low RNOA}Lines of credit {Ans: Available to be used as needed}Expected credit loss is calculated as {Ans: Chance of default x loss given default}An example of a situation in which company needs credit for investing activities {Ans: Mergers and acquisitions}How would cash collected on accounts receivable affect the balance sheet? {Ans: Increase assets (cash) and decrease assets (A/R)}GAAP Principles {Ans: Regularity (abide by rules), consistency (everything entered the same), sincerity, permanence of methods (FS all prepared the same), non-compensation (report good and bad), prudence (understate A overstate L), continuity (businesses are fully operational), periodicity (report in quarters, years,etc.), materiality (full disclosure), utmost good faith